Hyundai Life Insurance, an insurance unit of South Korea's Hyundai Motor Group, has recently cut a third of its employees due to mounting debt, an industry source said Monday.

The insurance firm has let 120 out of 450 employees go under a voluntary retirement program, according to the source.

Cumulative losses at the insurer stood at 220 billion won ($195 million) at the end of June.

(Yonhap)

Still, the financial health of Hyundai Life Insurance has improved, with its risk-based capital ratio standing at 164 percent, just above the recommended level of 150 percent.

Hyundai Life Insurance has been in talks with Hyundai Motor Group over a massive rights issue, according to people familiar with the matter, in a move to bolster its capital base ahead of the introduction of the new rule, called IFRS17, on the accounting of insurance products in 2021.

Under the rule, insurers' liabilities will be assessed on the basis of market value, instead of book value, at the time of a contract.

It's expected to enable a much "fairer" assessment of insurers' ability to withstand stress and also force them to have more capital bases and reserves to cover potential losses. But it will add to insurers' burden to raise their capital base.

Meanwhile, KDB Life Insurance, which has the lowest RBC ratio of 128.4 percent among the 14 life insurers that unveiled their numbers as of end-June, slashed 230 employees under their own voluntary retirement program between July and August. (Yonhap)